I'm reviewing my Home Owner's Policy and something struck me as odd. This is a Guaranteed Replacement Cost policy, but there are exceptions.
we will not pay more than the actual cash value at the time of the loss [...] for fine art, antiques, rare objects and other items which by their nature cannot be replaced with a comparable article;
While I guess that makes sense, what would "actual cash value" be? They give a definition at the beginning of the document:
actual cash value means the cost of replacement with materials of similar kind and quality less depreciation. In determining depreciation we will consider the condition immediately before the damage, the resale value (if personal property), obsolescence and normal life expectancy.
Ok, that's vague. Depreciation is normally not applicable to fine art. Appreciation is usually more of a concept that would apply. Resale value can be extremely arbitrary and difficult to determine, much less agree upon. "Obsolescence and normal life expectancy" wouldn't apply. Worried that "actual cash value" means the material cost of the canvas and paint, I noted they have a specific Fine Art Endorsement further down the document, which I could purchase for a modest premium. It reads:
We insure fine art but only:
• items valued up to $5,000, for which you have provided us with a complete description, including the year and value of the items; and
• items valued over $5,000, for which you have provided us with an appraisal of market value within 30 days of the effective date of this Endorsement. The appraisal must have been completed within the past 3 years.
Which I originally figured meant that so long as I have paid for this endorsement, I could value the art however I wish (with or without an appraisal as outlined above) given the premium varies based on the value. But then the next paragraph adds this in:
If you have a claim:
In the event of a claim insured by this endorsement we will pay the full cost of repair with materials of similar kind and quality, or replacement with a comparable article, whichever is less, without deduction for depreciation, up to the coverage limit for this endorsement on your Declaration. No deductible shall apply to this endorsement. However, we will not pay more than the actual cash value at the time of the loss:
• if repair or replacement is not complete as soon as reasonably possible and within one year following the date of loss; and
• for fine art which cannot be replaced with a comparable article.
Wait, what? That last bit brings us back to the situation we were at without the endorsement. The whole "fine art, antiques, rare objects and other items which by their nature cannot be replaced with a comparable article" bit.
Am I correct that paying the premium for that endorsement would be useless?
Why all this concerns me: I have several important (to me) pieces painted by relatively unknown artists. The cost of any given one was well under $5000, so appraisals don't apply but if I lost them I'd be out significantly. These artists are alive and, as far as I know, still actively painting... so if a piece were stolen, I'm sure I could commission a replacement. Is that cost the value with the endorsement? Without?
Perhaps the answer is to insure them separately with a company that specializes in Fine Art Collections. But of course I'd rather not pay extra if my normal house insurance does cover it (at least with the endoresement).
I called the company to ask. I thought the first person was just a trainee or something because all she did was regurgitate the policy wording verbatim. I asked to speak with someone "higher up" and that person didn't do much better. She was really vague and asked if I wanted the full policy sent to me. I assumed that would go into great detail, but it doesn't.
I'm shocked, really, how loosy-goosy they are while they're collecting premiums. The whole point of having insurance is in case of an event that requires it... and that's when the details matters.
Thoughts and opinions on how things would go down if a piece gets stolen?